Stepan Company

Good day, and thank you for standing by. Welcome to the Step-N Company first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Luis Rojo, CFO. Please go ahead.

Good morning, and thank you for joining Stephan Company's first quarter 2024 financial review. Before we begin, please note that information in this conference call contains forward-looking statements, which are not historical facts. These statements involve risk and uncertainties that could cause actual resource to defer material, including but not limited to prospects for foreign operations, global and regional economic conditions, and factors detailing our security and exchange commission filings. In addition, this conference call will include discussion of adjusted net income, adjusted EBITDA, and free cash flow, which are non-GAAP measures. We provide reconciliations to the compatible GATT measures in the earnings presentation and press release, which we have made available at www.stepan.com under the investor section of our website. Whether you're joining us online and over the phone, we encourage you to review the investor slide presentation. We make these slides available at approximately the same time as when the earnings release is issued, and we hope that you find the information and perspective helpful. With that, I would like to turn the call over to Mr. Scott Benz, our President and Chief Executive Officer.

Good morning, and thank you all for joining us today to discuss our first quarter 2024 results. I plan to share highlights from our first quarter performance, and will also share updates on our key strategic priorities, while Luis will provide additional details on our financial results. The company reported first quarter adjusted EBITDA of $51.2 million, up 5% year-over-year. Global sales volume was up 1% year-over-year. Volume weakness in the agricultural market due to continued inventory destocking and lower phthalic and hydride volumes due to ongoing operational issues at our mill sale site mostly offset the strong recovery in volumes across our other core markets. Global sales volume, excluding the impact of agricultural and PA, was up 4%. Surfactants experienced double-digit volume growth in personal care, in oil field and markets, and with our distribution partners. As expected, Latin American surfactant volumes grew strong double digits as we recovered volumes in Mexico. First quarter sales volume in Mexico was a record. Overall, volumes in our global consumer laundry and cleaning and our institutional cleaning businesses have stabilized, and we believe the stocking has run its course. Within polymers, rigid and specialty polyols grew mid-single digits, while specialty products volume was up double digits. From a company perspective, margins were in line with expectations despite unfavorable product mix. Net sales in the first quarter of 2024 decreased 15% year over year, primarily due to lower selling prices that were mainly attributable to the pass-through of lower raw material costs and less favorable product mix. These lower selling prices were partially offset by a 1% increase in global sales volume, as mentioned above, and the favorable impact of foreign currency translations. We generated positive free cash flow of $11.4 million as capital expenditures returned to historical levels, and these results give us confidence that we will close 2024 with positive free cash flow. The company is on track to deliver our $50 million cost reduction goal for 2024 through disciplined efforts in supply chain and workforce productivity actions taken in the last quarter of 2023. We expect these reductions to help offset higher operating costs related to operational interruptions at our mill sale site and pre-commissioning expenses at our new alcoxylation facility in Pasadena, Texas. During the first quarter of 2024, the company paid $8.5 billion in dividends to shareholders. The company did not repurchase any company stock during the first three months of 2024 and has $125 million remaining under the share repurchase program authorized by our board of directors. Yesterday, our Board of Directors declared a quarterly cash dividend on Stephan's common stock of 37.5 cents per share, payable on June 14, 2024. Stephan has paid and increased its dividend for 56 consecutive years. With the volume performance in several of our end markets delivering strong growth, we remain confident in the strength and diversity of our business and its ability to generate cash that will allow us to continue to invest in our business and return cash to our shareholders. Luis will now share some details about our first quarter results.